As incumbent utilities become more comfortable with the shape of
the future energy marketplace, they now have to make intelligent
choices about ‘where and how’ to compete in this broadening
space. They also need to position themselves to balance serving the
still fundamental needs of their legacy business with the emerging
demands of a nascent, but promising, market.

Thus, tailored strategies will need to be designed to enable
incumbents to match the requirements of the market with the ‘right’
blend of intrinsic customer value creation potential available from
utilities. These strategies will need to embrace the customer needs
that exist today, needs that are known today yet unserved and needs
that may be anticipated to emerge in the future, but are not recognized
today. These needs will relate to products and services that exist, and
to those that have not yet been conceived. Accordingly, utilities will
need to be adroit in understanding the direction of the future market,
as well as agile in designing the appropriate delivery model to satisfy
customer requirements. While these future strategies will be market,
customer segment and utility specific, they will encompass the
elements listed below:
• positioning in the future market
• capabilities for market success
• new product and service development
• leveraging new market channels
• winning through innovation

Positioning in the future market starts with building an informed
view of the dimensions and boundaries of the multiple sub-segments
comprising the new utility product and service portfolio. Incumbents
will need to establish their ‘purpose’ for market participation, e.g.,
providing end-to-end needs fulfilment. They will also have the choice
of developing strategies focused on expanding (growing), extending
(broadening) and/or enhancing (improving) their current market
position across the residential, commercial or industrial segments.
Thus, utilities will need to first realistically define ‘where to play’ and
shape the strategy for how they can create a differentiable advantage
against other providers.

Capabilities for market success will extend beyond those
outcomes that have traditionally been the hallmark of successful
utilities, such as operational excellence, financial discipline, regulatory
relationships and, customer satisfaction. New capabilities will need
to be developed and nurtured related to competing in a different type
of market and shaping ‘how to play’. These capabilities will include
skills related to market scanning, customer savvy, opportunity
origination, creative pricing, partnering prowess and, technology
deployment. Incumbents have the advantage of understanding
existing markets, although under different structural fundamentals.
Now they will have to define the capabilities that will enhance the
‘role’ of the incumbent in this new market.

New product and service development will be a table stake
for future growth with the connected customer. The sector will need
to create a product and service development engine that continuously
churns out inventive offerings that anticipate the needs of customers
and are packaged, priced and promoted attractively. The utility industry
will need to leverage existing and newly established relationships with
a range of out-of-industry partners, such as technology and consumer
companies, to enhance their ‘positioning’ and ‘how to win’. These
partnering arrangements will expand the capacity for development and
accelerate the availability of attractive offerings that enthuse customers
and enrich the nature of the incumbent – customer relationship.

Leveraging new market channels will be a fundamentally new
experience for incumbents. Historical channels were simple to define
and master, i.e., utilize the power of the franchise to offer product
enhancements, e.g., payment programs, as part of traditional regulated
service. The broader portfolio of potential products and services will
require more inventiveness. New channels, such as network partnering,
social media, mobile applications, targeted placement and, mass
market canvassing will become staples of the utility’s go-to-market
strategy. Thus, utilities will need to design strategies that both repurpose
traditional market distribution channels and create opportunities to
extend the ‘reach’ of the business in unconventional ways.

Winning through innovation comes from recognizing the value
of creative thinking and deeply embedding this capability throughout
the utility. Innovation has not been a hallmark of the utility sector
and has largely been limited to traditional research and development,
largely around generation technology and carbon. To meet the needs
of the future, utilities will need to focus on creating a culture of
innovation that sustains itself through continuous accomplishment
and market-ready idea generation. More importantly, incumbents will
need to focus on idea conversion that eresults in the commercialization
of new technologies and the proliferation of new products and services
that fulfil the promise of an energy revolution.

The ‘go-to-market’ customer strategies that are developed and
adopted by the utility industry will need to move well beyond those
regulatory-based ones that the industry relied on in the past. However,